According to the US Commerce Department, new home sales decreased -6.9% to an annualized pace of 673,000 in April 2019. Simultaneously, the median sales price for new homes was up +8.8% compared to a year earlier to $342,200. This price of $342,200 was the highest price for new home sales since December 2017 and $30,000 higher than new home prices in April 2018.
Interestingly enough, nearly the entire new home sales decline came within the market of homes priced below $300,00. Could this decline in new home sales, particularly at the lower end of the market indicate that the affects of lower interest rates are diminishing?
Sales of existing homes dropped also in April 2019 as did single-family permits although housing starts rose for the second month. The number of completed homes on the market rose to its highest level since 2010.
Regionally, the Northeast was the only area where purchases of new homes increased to the tune of +11.5%. Purchases of new homes in the South, Midwest and the West all fell with the West region of the country having the largest decrease in new home sales, -8.3%.
According to the US Census Bureau and the Department of Housing and Urban Development, the supply of homes at the current rate of sales is up to 5.9 months, compared with 5.6 months last month. Sales have risen +7% from April 2018 but are still below pre-recession numbers according to the Wall Street Journal.
Two positive signs portend well for the housing market…the number of homes sold that have not yet been started climbed to the highest level since 2017 and, even better, the number of completed homes on the market increased to its highest level +5.9 months from 5.7 months in April 2018.
Whatever good news can be gleaned from the above figures are somewhat dampened, however, by an as yet unreported eight month low in terms of ground-breakings in February 2019.